UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3198
IDAHO POWER COMPANY
(Exact name of registrant as specified in its charter)
Idaho 82-0130980
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1221 W. Idaho Street, Boise, Idaho 83702-5627
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 383-2200
None
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of Common Stock, $2.50 par value, outstanding as of
April 30, 1994 is 37,344,299.
IDAHO POWER COMPANY
Index
PART I. FINANCIAL INFORMATION: Page No
Item 1. Financial Statements
Consolidated Statements of Income - Three Months
and Twelve Months Ended March 31, 1994
and March 31, 1993 3-4
Consolidated Balance Sheets - March 31, 1994
and December 31, 1993 5, 6
Consolidated Statements of Cash Flows -
Three Months and Twelve Months Ended March 31,
1994 and March 31, 1993 7, 8
Consolidated Statements of Capitalization -
March 31, 1994 and December 31, 1993 9
Notes to Consolidated Financial Statements 10-11
Report on Review by Independent Accountants 12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13-20
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 21-22
Item 6. Exhibits and Reports on Form 8-K 23-24
Signatures 25
PART I - FINANCIAL INFORMATION
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED March 31, 1994 AND 1993
ITEM 1. FINANCIAL STATEMENTS
Three Months Ended
March 31, Increase
1994 1993 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 4) $128,810 $140,809 $(11,999)
EXPENSES (Note 1):
Operation:
Purchased power 5,214 8,495 (3,281)
Fuel expense 25,487 25,984 (497)
Other 28,847 35,077 (6,230)
Maintenance 10,042 8,867 1,175
Depreciation 16,033 15,419 614
Taxes other than income taxes 5,779 5,488 291
Total expenses 91,402 99,330 (7,928)
INCOME FROM OPERATIONS 37,408 41,479 (4,071)
OTHER INCOME:
Allowance for equity funds used during
construction (Note 2) 726 795 (69)
Other - Net 2,530 2,775 (245)
Total other income 3,256 3,570 (314)
INTEREST CHARGES:
Interest on long-term debt 12,795 13,613 (818)
Other interest 719 307 412
Total interest charges 13,514 13,920 (406)
Allowance for borrowed funds used
during construction and capitalized
interest (Note 2) (516) (828) 312
Net interest charges 12,998 13,092 (94)
INCOME BEFORE INCOME TAXES 27,666 31,957 (4,291)
INCOME TAXES 9,406 10,610 (1,204)
NET INCOME 18,260 21,347 (3,087)
Dividends on preferred stock 1,789 1,345 444
EARNINGS ON COMMON STOCK $ 16,471 $ 20,002 $ (3,531)
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,249 36,338 N/A
Earnings per share of common stock $ 0.44 $ 0.55 $ (0.11)
Dividends paid per share of common stock $ 0.465 $ 0.465 $ -
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED March 31, 1994 and 1993
Twelve Months Ended
March 31, Increase
1994 1993 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 4) $528,403 $524,449 $ 3,954
EXPENSES (Note 1):
Operation:
Purchased power 42,079 62,775 (20,696)
Fuel expense 87,358 99,882 (12,524)
Other 115,024 109,433 5,591
Maintenance 44,310 35,868 8,442
Depreciation 59,337 60,395 (1,058)
Taxes other than income taxes 22,420 20,687 1,733
Total expenses 370,528 389,040 (18,512)
INCOME FROM OPERATIONS 157,875 135,409 22,466
OTHER INCOME:
Allowance for equity funds used during
construction (Note 2) 2,991 2,972 19
Other - Net 9,678 8,867 811
Total other income 12,669 11,839 830
INTEREST CHARGES:
Interest on long-term debt 52,889 54,339 (1,450)
Other interest 3,161 1,392 1,769
Total interest charges 56,050 55,731 319
Allowance for borrowed funds used
during construction and capitalized
interest (Note 2) (2,153) (2,818) 665
Net interest charges 53,897 52,913 984
INCOME BEFORE INCOME TAXES 116,647 94,335 22,312
INCOME TAXES 35,270 26,376 8,894
NET INCOME 81,377 67,959 13,418
Dividends on preferred stock 6,453 5,437 1,016
EARNINGS ON COMMON STOCK $ 74,924 $ 62,522 $ 12,402
AVERAGE COMMON SHARES
OUTSTANDING (000) 36,902 35,670 N/A
Earnings per share of common stock $ 2.03 $ 1.75 $ 0.28
Dividends paid per share of common stock $ 1.86 $ 1.86 $ -
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1994 1993
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $2,302,642 $2,249,723
Less accumulated provision for
depreciation 740,755 728,979
In service - Net 1,561,887 1,520,744
Construction work in progress 62,429 92,682
Held for future use 2,958 2,958
Electric plant - Net 1,627,274 1,616,384
INVESTMENTS AND OTHER PROPERTY 19,956 20,772
CURRENT ASSETS:
Cash and cash equivalents 4,804 8,228
Receivables:
Customer 30,976 29,741
Less allowance for uncollectible accounts (1,572) (1,377)
Notes 5,570 5,616
Employee notes receivable 5,927 5,909
Other 3,035 1,858
Accrued unbilled revenues (Note 1) 18,774 25,583
Materials and supplies (at average cost) 23,331 23,372
Fuel stock (at average cost) 9,944 11,553
Prepayments 19,086 20,975
Regulatory assets associated with income taxes 4,967 4,914
Total current assets 124,842 136,372
DEFERRED DEBITS:
American Falls and Milner water rights 32,755 32,755
Company owned life insurance 44,721 45,294
Regulatory assets associated with income taxes 173,039 171,569
Regulatory assets other 38,974 35,036
Other 40,273 39,235
Total deferred debits 329,762 323,889
TOTAL $2,101,834 $2,097,417
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION & LIABILITIES
March 31, December 31,
1994 1993
(Thousands of Dollars)
CAPITALIZATION (SEE PAGE 9):
Common stock equity - $2.50 par value (shares
authorized 50,000,000; shares outstanding
March 31, 1994 - 37,331,367; December 31,
1993 - 37,085,055) $ 651,028 $ 662,367
Preferred stock 132,632 132,751
Long-term debt (Note 5) 693,786 693,780
Total capitalization 1,477,446 1,488,898
CURRENT LIABILITIES:
Long-term debt due within one year 466 466
Notes payable 2,000 4,000
Accounts payable 20,879 31,912
Taxes accrued 22,175 15,452
Interest accrued 14,303 14,920
Other 31,536 13,731
Total current liabilities 91,359 80,481
DEFERRED CREDITS:
Accumulated deferred investment tax credits 71,836 72,013
Accumulated deferred income taxes 363,289 358,280
Regulatory liabilities associated with income taxes 35,065 34,968
Regulatory liabilities 3,359 4,235
Other 59,480 58,542
Total deferred credits 533,029 528,038
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 3)
TOTAL $2,101,834 $2,097,417
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
Three Months Ended
March 31
1994 1993
(Thousands of Dollars)
OPERATING ACTIVITIES:
Cash received from operations:
Retail revenues $112,537 $116,847
Wholesale revenues 18,110 16,879
Other revenues 5,614 5,860
Fuel paid (25,263) (23,037)
Purchased power paid (7,581) (15,163)
Other operation & maintenance paid (41,303) (36,462)
Interest paid (includes long and
short-term debt only) (13,411) (18,724)
Income taxes paid (2,030) (1,508)
Taxes other than income taxes paid (1,883) (1,702)
Other operating cash receipts and payments-Net (4,506) (1,146)
Net cash provided by operating activities 40,284 41,844
FINANCING ACTIVITIES:
PC bond fund requisitions/other long-term debt - 4,376
Common stock issued 6,765 6,589
Short-term borrowings (2,000) (1,000)
Long-term debt retirement (16) (16)
Preferred stock retirement (76) (7)
Dividends on preferred stock (1,814) (1,386)
Dividends on common stock (17,250) (16,833)
Net cash - financing activities (14,391) (8,277)
INVESTING ACTIVITIES:
Additions to utility plant (26,513) (30,076)
Conservation (1,384) (1,490)
Other (1,420) 488
Net cash - investing activities (29,317) (31,078)
Change in cash and cash equivalents (3,424) 2,489
Cash and cash equivalents beginning of period 8,228 4,966
Cash and cash equivalents end of period $ 4,804 $ 7,455
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 18,260 $ 21,347
Adjustments to reconcile net income to net cash:
CSPP-Net amortization/(deferral) - (519)
Depreciation 16,033 15,419
Deferred income taxes 4,032 1,790
Investment tax credit-Net (177) (124)
Allowance for funds used during construction (1,242) (1,623)
Postretirement benefits funding (excl pensions) (1,336) (884)
Changes in operating assets and liabilities:
Accounts receivable 7,451 (1,223)
Fuel inventory 224 2,947
Accounts payable (2,367) (6,149)
Taxes payable 7,426 11,236
Interest payable (95) (4,846)
Other - Net (7,925) 4,473
Net cash provided by operating activities $ 40,284 $ 41,844
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1994 AND 1993
Twelve Months Ended
March 31,
1994 1993
(Thousands of Dollars)
OPERATING ACTIVITIES:
Cash received from operations:
Retail revenues $430,315 $443,990
Wholesale revenues 85,957 46,017
Other revenues 23,165 26,430
Fuel paid (86,111) (93,776)
Purchased power paid (42,664) (64,085)
Other operation & maintenance paid (166,854) (148,161)
Interest paid (includes long and
short-term debt only) (51,035) (56,148)
Income taxes paid (33,034) (15,937)
Taxes other than income taxes paid (22,347) (21,416)
Other operating cash receipts and payments-Net 4,853 (4,302)
Net cash provided by operating activities 142,245 112,612
FINANCING ACTIVITIES:
First mortgage bonds issued 188,136 -
PC bond fund requisitions/other long-term debt 1,218 12,398
Common stock issued 26,957 56,802
Preferred stock issued 24,781 -
Short-term borrowings (3,140) 5,000
Long-term debt retirement (191,877) (52,086)
Preferred stock retirement (134) (104)
Dividends on preferred stock (6,343) (5,388)
Dividends on common stock (68,376) (66,077)
Net cash - financing activities (28,778) (49,455)
INVESTING ACTIVITIES:
Additions to utility plant (119,386) (120,574)
Conservation (6,581) (5,795)
Other 9,849 3,617
Net cash - investing activities (116,118) (122,752)
Change in cash and cash equivalents (2,651) (59,594)
Cash and cash equivalents beginning of period 7,455 67,049
Cash and cash equivalents end of period $ 4,804 $ 7,455
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 81,377 $ 67,959
Adjustments to reconcile net income to net cash:
CSPP-Net amortization/(deferral) - (3,649)
Depreciation 59,337 60,395
Deferred income taxes 8,932 7,858
Investment tax credit-Net (1,635) (1,192)
Allowance for funds used during construction (5,144) (5,790)
Postretirement benefits funding (excl pensions) (7,932) (9,287)
Changes in operating assets and liabilities:
Accounts receivable 11,034 (8,012)
Fuel inventory 1,247 6,106
Accounts payable (584) 2,340
Taxes payable (4,952) 3,104
Interest payable 3,741 (722)
Other - Net (3,176) (6,498)
Net cash provided by operating activities $142,245 $112,612
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
March 31, December 31,
1994 1993
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock (Note 5) $ 93,328 $ 92,713
Premium on capital stock 357,065 350,882
Capital stock expense (4,128) (4,128)
Retained earnings 204,763 222,900
Total common stock equity 651,028 44.1% 662,367 44.5%
PREFERRED STOCK, cumulative, ($100 PAR
OR STATED VALUE):
4% preferred stock (authorized 215,000;
shares outstanding: 1994-176,319;
1993-177,506) 17,632 17,751
Serial preferred stock, authorized
150,000 shares:
7.68% Series, outstanding 150,000 shares 15,000 15,000
Serial preferred stock, without par value,
authorized 3,000,000 shares:
8.375% Series (authorized and outstanding
250,000 shares) 25,000 25,000
Auction Rate Preferred Series A
(authorized and outstanding 500 shares) 50,000 50,000
7.07% Series (authorized and outstanding
250,000 shares) 25,000 25,000
Total preferred stock 132,632 9.0 132,751 8.9
LONG-TERM DEBT (NOTE 5):
First mortgage bonds:
5 1/4% Series due 1996 20,000 20,000
5.33 % Series due 1998 30,000 30,000
8.65 % Series due 2000 80,000 80,000
6.40 % Series due 2003 80,000 80,000
8 % Series due 2004 50,000 50,000
9.50% Series due 2021 75,000 75,000
7.50% Series due 2023 80,000 80,000
8 3/4% Series due 2027 50,000 50,000
9.52% Series due 2031 25,000 25,000
Total first mortgage bonds 490,000 490,000
Pollution control revenue bonds:
5.90 % Series due 2003 25,050* 25,050*
6 % Series due 2007 24,000 24,000
7 1/4% Series due 2008 4,360 4,360
7 5/8% Series 1983-1984 due 2013-2014 68,100 68,100
8.30 % Series 1984 due 2014 49,800 49,800
Total pollution control revenue bonds 171,310 171,310
*Less amount due within one year (400) (400)
Net pollution control revenue bonds 170,910 170,910
REA Notes 1,817 1,834
Less amount due within one year (66) (66)
Net REA Notes 1,751 1,768
American Falls bond guarantee 21,055 21,055
Milner Dam note guarantee 11,700 11,700
Unamortized premium/discount - Net (1,630) (1,653)
Total long-term debt 693,786 46.9 693,780 46.6
TOTAL CAPITALIZATION $1,477,446 100.0% $1,488,898 100.0%
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES:
FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments necessary to
present fairly the consolidated financial position as of March
31, 1994 and the consolidated results of operation for the three
months and twelve months ended March 31, 1994 and 1993 and the
consolidated cash flows for the three months and twelve months
then ended. These condensed financial statements do not contain
the complete detail or footnote disclosure concerning accounting
policies and other matters which would be included in full year
financial statements and therefore they should be read in
conjunction with the Company's audited financial statements
included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1993. The results of operation for the
interim periods are not necessarily indicative of the results to
be expected for the full year.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Idaho Energy
Resources Co (IERCo), Idaho Utility Products Company (IUPCo),
IDACORP, INC. and Ida-West Energy Company (Ida-West). All
significant intercompany transactions and balances have been
eliminated in consolidation.
REVENUES
In order to match revenues with associated expenses, the Company
accrues unbilled revenues for electric services delivered to
customers but not yet billed at month-end.
CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and highly liquid temporary investments
with original maturity dates of three months or less.
RECLASSIFICATIONS
Certain items previously reported for periods prior to 1994 have
been reclassified to conform with the current year's
presentation. Net income was not affected by these
reclassifications.
2. ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFDC):
The allowance, a non-cash item, represents the composite
interest costs of debt, shown as a reduction to interest
charges, and a return on equity funds, shown as an addition to
other income, used to finance construction. While cash is not
realized currently from such allowance, it is realized under the
rate making process over the service life of the related
property through increased revenues resulting from higher rate
base and higher depreciation expense. Based on the uniform
formula adopted by the Federal Energy Regulatory Commission, the
Company's weighted average monthly AFDC rate for the three
months ended March 31, 1994, was 9.1 percent and was 9.6 percent
for the entire year of 1993.
3. COMMITMENTS AND CONTINGENT LIABILITIES:
Commitments under contracts and purchase orders relating to the
Company's program for construction and operation of facilities
amounted to approximately $22,800,000 at March 31, 1994. The
commitments are generally revocable by the Company subject to
reimbursement of manufacturers' expenditures incurred and/or
other termination charges.
The Company is party to various legal claims, actions and
complaints, certain of which involve material amounts. Although
the Company is unable to predict with certainty whether or not
it will ultimately be successful in these legal proceedings or,
if not, what the impact might be, based upon the advice of legal
counsel, management presently believes that disposition of these
matters will not have a material adverse effect on the Company's
financial position, results of operations or cash flows.
4. POWER COST ADJUSTMENT:
The Company has in place a power cost adjustment (PCA) mechanism
which allows the customer's rates to be adjusted annually to
reflect the Company's forecasted net power supply costs.
Deviations from forecasted costs are deferred with interest and
then adjusted (trued-up) in the subsequent year. The Company is
currently recording a PCA debit in the amount of $1.5 million at
March 31, 1994. The current balance is adjusted monthly as
actual conditions are compared to the forecasted net power
supply costs.
5. FINANCING:
(a) Debt:
The Company currently has a $200,000,000 shelf registration
statement which can be used for both First Mortgage Bonds
(including Medium Term Notes) and Preferred Stock.
(b) Stock:
The Company currently issues original issue shares of common
stock for its Dividend Reinvestment and Stock Purchase Plan,
Employee Savings Plan, and Employee Stock Ownership Plan. For
the three months ended March 31, 1994, 246,312 shares have been
issued to these plans and 898,528 shares were issued for the
entire year of 1993.
INDEPENDENT ACCOUNTANTS' REPORT
Idaho Power Company
Boise, Idaho
We have reviewed the accompanying consolidated balance sheet and
statement of capitalization of Idaho Power Company and subsidiaries as
of March 31, 1994 and the related consolidated statements of income and
of cash flows for the three-month and twelve-month periods ended
March 31, 1994 and 1993. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope
than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet and statement of
capitalization of Idaho Power Company and subsidiaries as of December
31, 1993 and the related consolidated statements of income, retained
earnings, and cash flows for the year then ended (not presented herein);
and in our report dated January 29, 1994, we expressed an unqualified
opinion on those consolidated financial statements (which includes an
explanatory paragraph relating to a change in the Company's method of
accounting for income taxes and postretirement benefits in the year ended
December 31, 1993). In our opinion, the information set forth in the
accompanying consolidated balance sheet and statement of capitalization
as of December 31, 1993 is fairly stated, in all material respects, in
relation to the consolidated balance sheet and statement of capitalization
from which it has been derived.
DELOITTE & TOUCHE
Portland, Oregon
April 29, 1994
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Idaho Power Company's consolidated, wholly-owned subsidiaries consist
of Idaho Energy Resources Co. (IERCO), Ida-West Energy Company (Ida-
West), IDACORP, INC, and Idaho Utility Products Company (IUPCO).
Together, Idaho Power and these subsidiaries are referred to herein as
the Company.
The Company is a predominately hydroelectric utility and as such, its
results of operations, like those of certain other utilities in the
Northwest, can be significantly affected by weather and streamflow
conditions. Variations in energy usage by general business consumers
occur from season to season and from month to month within a season,
primarily as a result of weather conditions. Sales of non-firm (off-
system) energy to other utilities also vary by quarters and years,
depending principally upon water conditions for the generation of hydro
energy coinciding with the energy requirements of other utilities.
Operating costs fluctuate principally due to the impact of increased
reliance on thermal generation or purchases of power from others during
periods of reduced hydroelectric generation capability or strong non-
firm energy market conditions. When fully implemented in the Idaho
jurisdiction, the Power Cost Adjustment (PCA) mechanism (which includes
a major portion of the operating expenses with the largest variation
potential) will allow the Company's future operating and earnings per
share results to be more dependent upon general regulatory, economic,
and temperature related weather conditions and less on precipitation
related weather and streamflow conditions.
EARNINGS PER SHARE
Earnings per share of common stock were $0.44 for the quarter and $2.03
for the twelve months ended March 31, 1994. These earnings result in
an 11 cent (20 percent) decrease for the three month period, and a
28 cent (16 percent) increase for the twelve month period. The twelve
month earnings equate to an 11.5 percent earned return on year-end
March 31, 1994 common equity compared to the 10.1 percent earned
through March 31 of last year.
RESULTS OF OPERATIONS
PRECIPITATION AND STREAMFLOWS
The first three months of 1994 were characterized by below normal
precipitation and above normal temperatures throughout the service
territory. For the Snake River above Brownlee Reservoir (water source
to the three dam Hells Canyon complex which generates about half of the
electricity produced by the Company in a normal year), the average
snowpack is 59 percent of the 30-year average compared to 90 percent of
average last year at this time. However, reservoir storage above
Brownlee is 80 percent of capacity and 115 percent of average this year
compared to 54 percent of capacity a year ago.
Inflows into Brownlee result from a combination of precipitation,
storage and ground water conditions and at this time are expected to be
2.9 million acre-feet (MAF) or approximately 60 percent of the 65-year
median of 4.8 MAF during the April-July period.
ENERGY REQUIREMENTS
The Company's total system energy requirements for the three month
period have been supplied from the following sources: hydro generation
45 percent, thermal generation 51 percent and purchased power and other
interchanges 4 percent. This compares to a total system energy
requirement of 46 percent hydro, 48 percent thermal and 6 percent from
purchased power and other interchanges for the same period of 1993.
With precipitation and streamflows below normal, the Company estimates
that 44 percent of its 1994 energy requirements will come from hydro
generation, 45 percent from thermal generation and 11 percent from
purchased power and other interchanges. Under normal conditions, the
Company's hydro system would contribute approximately 58 percent with
thermal generation accounting for approximately 36 percent and the
remaining 6 percent from purchased power and other interchanges.
POWER COST ADJUSTMENT
The Company has a Power Cost Adjustment (PCA) mechanism in its Idaho
jurisdiction that enables the Company to collect, or refund a portion
of the difference between net power supply costs actually incurred and
those allowed in the base rates of the Company. The PCA is adjusted
monthly as actual conditions are compared to the forecasted net power
supply costs. At March 31, 1994, the Company had recorded $1.5 million
of power supply costs above those projected in the 1993 forecast which
will be included in the true-up portion of the 1994 PCA. Currently, 60
percent of the net power supply cost deviations from normalized rates
are included in the PCA. After the Company's next general revenue
requirement case is completed, the PCA will be raised to 90 percent of
net power supply cost deviations. The Company filed its 1994 PCA
application on April 15, 1994. This application requests an increase
in the Idaho jurisdiction base rates. The increase over last year's
PCA adjustment, for the period May 16, 1994 through May 15, 1995, is
approximately $9.8 million or 2.5 percent which includes last year's
true-up and other adjustments.
REVENUES
General business revenues were down for both the quarter ($11.0 million
or 9.8 percent) and twelve months ending March 31, 1994 ($30.4 million
or 6.8 percent). The quarterly decrease reflects above normal winter
temperatures (compared to a more normal winter in 1993) which reduced
demand in weather sensitive (residential and small commercial) customer
classes. Additionally, large industrial loads were down due to reduced
demand caused by temporary changes in operations at the FMC
Corporation. The decline was somewhat offset by an increase in total
general business customers served of 10,935, a 3.5 percent increase
when compared to March 31, 1993. The reduction for the twelve month
period reflects the first quarter changes as well as decreased 1993
irrigation loads caused by above normal precipitation during the spring
and cool summer temperatures. Again, these decreases in revenues were
partially offset by the increase in general business customers. Both
periods also include the effect of the expiration in 1993 of the one-
year temporary drought rate related rate relief approved in May 1992,
by the IPUC and the addition of the PCA instituted in May 1993.
Firm sales were up $6.4 million and $13.1 million for the quarter and
twelve month periods ended March 31, 1994. These increases were due to
the addition of two firm contracts signed during 1993.
Surplus sales were down $7.6 million during the first quarter but were
up $21.0 million for the twelve month period. The decrease reflects
the lower precipitation received during the quarter and resultant
reduced hydro-generation and less favorable market conditions while the
increase reflects the improved hydro-generation conditions experienced
during the last nine months of 1993.
Total operating revenues declined $12.0 million (8.5 percent) for the
first three months of 1994 but improved $4.0 million (0.8 percent) for
the twelve months ended March 31, 1994, when compared to the
corresponding periods a year ago.
GENERAL REVENUE REQUIREMENT CASE
In April, the Company filed a notice with the IPUC stating its current
intention to file a general revenue requirement rate case in its Idaho
jurisdiction on or after June 8, 1994. The purpose of the filing would
be to bring all of the Company's cost components to a current level in
response to concerns expressed by the IPUC and various customer groups
in recent regulatory proceedings. In this filing, the Company's
allowed return on equity, among other things, will be subject to
review. Recently allowed returns on common equity granted nationally
have declined. This has created a contrast for some utilities with
dividend payout levels set during periods of higher allowed returns.
The Company will request an allowed return on equity above its present
dividend yield on year-end book value sufficient to provide, among
other things, current earnings to cover dividend payments, but cannot
predict the final outcome of such rate proceedings in the current low
interest rate environment.
EXPENSES
Total operating expenses were down $7.9 million (8.0 percent) for the
quarter and $18.5 million (4.8 percent) for the twelve months ended
March 31,1994.
Purchased power and fuel expenses were lower for both the three and
twelve month periods. These declines reflect reduced firm energy sales
and less favorable surplus market conditions during the first quarter
and the improved hydro-generation conditions for the last nine months
of 1993 compared with 1992, a year of severe drought.
All other operation and maintenance expenses were down $5.1 million for
the three months ended March 31, 1994 but were up $14.0 million for the
twelve month period. The decline for the quarter reflects unusually
high expenses in 1993 resulting from the deferral of certain net power
supply costs from 1992 into 1993 to match revenues collected under the
temporary rate surcharge. The increase for the twelve month period is
due to increased maintenance expense as the Company returned to a more
normal level of operation in 1993 and 1994 as contrasted with the
drought affected year of 1992. It also reflects increases in certain
regulatory commission and employee payroll and benefit expenses.
Depreciation expense increased as a result of greater plant investment
base.
Total interest expense remained fairly constant for the three and
twelve month periods reflecting the refinancing done during 1993 which
reduced long-term interest expense and increases in other interest
expense associated with tax settlements with the Internal Revenue
Service. Income taxes decreased for the quarter but increased for the
twelve month period reflecting the changes in pre-tax income.
IDA-WEST
Ida-West Energy Company (Ida-West), a wholly owned subsidiary of the
Company, through various partnerships, owns 50 percent of five
hydroelectric projects located in Idaho with a total generating
capacity of approximately 34 megawatts, all of which are operated by an
Ida-West subsidiary. Third parties unaffiliated with Ida-West own the
remaining 50 percent of these projects, thus satisfying "qualifying
facility" status under PURPA guidelines. These partnerships have
obtained project financing (nonrecourse to the Company) for each of
these facilities.
As a result of a construction-related incident involving the Falls
River Project in 1992, the FERC issued a notice proposing civil
penalties of no more than $500,000 against the project entity for
alleged license and FERC regulation violations. In a settlement
approved by the FERC on March 30, 1994, the project entity agreed to
pay a civil penalty of $300,000, which was previously recorded as a
liability, without admitting any violations.
As part of its Resource Contingency Program, the Bonneville Power
Administration (BPA) requested proposals to provide up to 800 average
megawatts of energy options. Ida-West along with two partners
submitted a proposal for a 227 megawatt gas-fired cogeneration project
to be located near Hermiston, Oregon, which was one of ten projects
being given final consideration by BPA. On June 4, 1993, BPA selected
the partnership's project, together with two other projects, to
participate in the program. The partnership and BPA have signed an
option development agreement that grants BPA an option to acquire
energy and capacity from the project, including an exclusive right to
acquire energy and capacity from a second 233 megawatt unit at the
site, at any time during a five-year option hold period after all
option development period tasks, including permitting, have been
completed and that entitles the partnership to reimbursement by BPA for
certain development costs based on milestones achieved. In addition,
in March 1994, BPA and the partnership reached agreement on the power
purchase contract setting forth the terms and conditions on which BPA
will purchase energy and capacity from the project upon exercise of the
option. The partnership expects the project development period tasks
to be completed by year-end 1995. Project financing for construction
costs would be non-recourse to the Company.
The Company's total equity investment in Ida-West is $20 million. Ida-
West continues to actively seek new projects.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Net cash generation from operations for the three months ended March
31, 1994 amounted to $40.3 million. After deducting for both common
and preferred dividends, net cash generation from operating activities
provided approximately $21.2 million (a 10.2 percent decrease from the
same period of 1993) for the Company's construction program and other
capital requirements.
CASH EXPENDITURES
The Company's cash construction program for 1994 is presently estimated
to require cash funds of approximately $119.5 million. Generating
facilities comprise approximately 39 percent of the total required cash
funds, transmission 11 percent, distribution 31 percent with the
balance for general plant and equipment. This estimate is subject to
revision in light of changing economic, regulatory and environmental
factors and conservation policies. Approximately $27.9 million was
expended during the first three months for construction and
conservation.
The Company's primary financial commitments and obligations are related
to contracts and purchase orders associated with the ongoing
construction program and are expected to be financed using both
internally generated funds and externally financed capital to the
extent required. Although the Company has regulatory approval to incur
up to $150 million of bank borrowings, it presently maintains lines of
credit aggregating $70 million with various banks which may be used to
finance a portion of the construction program on an interim basis. At
March 31, 1994, the Company had $3.4 million of temporary cash
investments and short-term borrowings of $2.0 million.
FINANCING PROGRAM
The Company continues to issue original issue shares through its
Employee Savings, Dividend Reinvestment and Stock Purchase and Employee
Stock Ownership Plans. During the first three months 246,312 shares
were issued, producing approximately $6.8 million in proceeds to the
Company. The Company anticipates issuing sufficient shares of common
stock through these plans to generate approximately $13 million during
1994.
The Company has on file a shelf registration statement for the issuance
of first mortgage bonds and/or preferred stock with a total aggregate
principal amount not to exceed $200 million.
The Company's current objective is to maintain capitalization ratios of
approximately 45 percent common equity, 8 to 10 percent preferred stock
and the balance long-term debt. The Company's strategy is to achieve
this target structure through accumulated earnings and issuance of new
equity. The Company continues to explore cost savings through the
economic refunding of current outstanding issues. For the twelve month
period ended March 31, 1994 the Company's consolidated pre-tax interest
coverage was 3.08 times.
CONSTRUCTION PROGRAM
Testing of unit one at the Swan Falls project was completed and the
unit was declared available for commercial operation. Testing on unit
2 is nearly complete and is expected to be available for operation in
early May 1994. Additional work to preserve the old historical power
plant site will be completed by year-end 1994. Expansion of the Twin
Falls project continues with completion estimated for mid-1995.
Revised total cash expenditures of the Twin Falls expansion are
currently estimated at $39.6 million with total construction costs at
$42.4 million including allowance for funds used during construction.
These two projects will add 56 megawatts of new capacity when
completed.
The Company continues to explore the economic feasibility of
constructing the Southwest Intertie Project. Approval of the Final
Environmental Impact Statement/Proposed Plan Amendment from the Bureau
of Land Management is expected during the second quarter of 1994. The
Company has commenced negotiations with various utilities and electric
providers for financial participation in the project. It is the
Company's intention to retain up to a 20 percent ownership in the line.
SALMON RECOVERY PLAN
The Company continues to be actively involved with the long-term
survival of anadromous fish runs on the Columbia and Lower Snake
Rivers. The Company fully supports and actively participates in the
regional effort to develop a comprehensive and scientifically credible
recovery program for the salmon.
The Snake River Salmon Recovery Team submitted its Draft Recovery Plan
(Draft Plan) to the National Marine Fisheries Service (NMFS) detailing
its draft recommendations for restoring the listed Snake River salmon
runs. The Company has concluded a review of the 500-page report and
believes it sets forth a course of action that if fully implemented
could lead to a successful recovery. The Draft Plan details comments
regarding some institutional changes and responsibility for management
of the recovery efforts. It suggests reductions in the ocean and in-
river harvest rates, calls for significant improvements in
transportation and collection systems, supports flow augmentation and
habitat improvements, calls for a test drawdown of the Lower Granite
Reservoir on the Snake River and suggests habitat, hatchery and
predation improvements. The Company will continue to closely monitor
the finalization of the Draft Plan which is to be released in 1994.
Pending the completion of a final recovery plan by the NMFS, the U.S.
Army Corps of Engineers and other governmental agencies responsible for
operating the federally-owned dams and reservoirs on the Snake and
Columbia Rivers, have annually consulted with the NMFS regarding
federal system operations. On March 28, 1994, Judge Malcolm Marsh of
the U.S. District Court for the District of Oregon ordered the federal
agencies to reinitiate the consultation completed for the 1993
operation of the federal system. Judge Marsh concluded that the
consultations and subsequent operation of the federal system was
"...too heavily geared towards a status quo that has allowed all forms
of river activity to proceed..." at the expense of the fish. Although
the Company has coordinated its operations to aid the federal agencies
with their salmon recovery efforts, neither the Company nor the
operation of any of the Company's facilities was directly involved in
this litigation. It is possible that the court ordered re-consultation
could lead to a change in operations for Company facilities in 1994.
The Company is unable to assess the impacts, if any, that might occur
as a result of any such changes.
It is possible the final recovery plan could have a material impact on
the Company, as well as every other person, community and industry in
the Northwest that depend on the Snake and Columbia Rivers. The
Company is hopeful that the anadromous fish runs can be restored to the
level that society demands without undue hardship placed upon the
Company and those who benefit from its service.
RELICENSING
The Company's internal task force continues to vigorously pursue the
relicensing of its hydro electric projects during the next 10 to 15
years. Although various federal relicensing requirements and issues
need to be resolved in the relicensing process, the Company anticipates
that its efforts in this matter for all of the hydro facilities will
prove to be successful. The Company can not anticipate what type of
environmental or operational requirements may be placed on the projects
in the relicensing process, nor can it estimate what the eventual cost
will be for relicensing.
COMPETITION
The electric utility industry in general has become, and is expected to
be, increasingly competitive due to a variety of regulatory, economic
and technological developments. With the advent of this more
competitive environment, the Company continues to review and proceed
with its ongoing strategic planning process. The Company's goal is to
anticipate and fully integrate into its operations any legislative,
regulatory, environmental, competitive and technological changes. The
Company is well positioned to succeed in a more competitive environment
with its low cost of energy production and is taking action to preserve
its competitive advantage.
In September 1993, the Company submitted a detailed position paper to
its state regulators and other interested parties outlining proposed
resource acquisition policy changes. With the potential deregulation
of the electric utility industry and a more competitive power supply
market place, the Company believes that current resource acquisition
policies must be changed to avoid burdening the Company and customers
with unnecessary future power supply costs. The Company believes that
the appropriate criteria to be utilized in establishing the requirement
for future supply additions is need at the time of development and that
the addition is the least-cost market alternative. Accordingly, in
December 1993, the Company filed with the Idaho Public Utilities
Commission (IPUC) for permission to approve lower prices for new
cogeneration and small power production (CSPP) contracts. In response
to the Company's filing, the IPUC found that there is good reason to
believe that current Idaho CSPP purchase rates are too high and that
rates contained in new CSPP contracts are subject to revision based on
its final outcome.
On March 29, 1994 the Company filed an application with the IPUC
seeking approval of the terms of a proposed cancellation of a January
22, 1993 Firm Energy Sales Agreement between Meridian Generating
Company, L.P. (MGC) and the Company. The Firm Energy Sales Agreement
is a 25-year agreement with MGC for a 54 MW natural gas-fired combined
cycle cogeneration facility located in Meridian, Idaho with an
estimated annual net firm energy production of 418,200 MWH and a
scheduled operation date of January 1, 1996. The Company can replace
the MGC agreement with less expensive power from an alternate source.
The Company estimates that the revenue requirement savings, including
cancellation charges paid to MGC, is between $130 to $170 million. The
IPUC placed this filing on Modified Procedures on April 12, 1994 with a
deadline of May 6, 1994 for interested parties to file written comments
or protests.
Rosebud Enterprises, Inc. (Rosebud) filed a Complaint against the
Company with the IPUC alleging that the Company unlawfully refused to
sign a contract to purchase the output of a 40 MW petroleum waste-fired
electric generating plant Rosebud proposes to build near Mountain Home,
Idaho (Mountain Home Project). Because the Mountain Home Project is
larger than 10 MW, the IPUC's established rates for small CSPP projects
are not available to Rosebud. The parties have not been successful in
negotiating a purchase price for the output of the Mountain Home
Project. On April 20, 1994, the IPUC issued an Order clarifying the
parameters for further negotiations and determining dispute resolution
procedures to be followed if the parties are unable to negotiate a
mutually acceptable purchase price.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 6, 1991, a complaint entitled Nez Perce Tribe, Plaintiff,
v. Idaho Power Company, Defendant, Civil No. CIV 91-0517-S-EJL, was
filed against the Company in the United States District Court for the
District of Idaho. The Company was served with the Complaint on
March 26, 1992. In the Complaint, the Tribe contends that pursuant to
treaties with the United States Government including the Treaty of
June 11, 1855, 12 Stat. 957, and the Treaty of June 9, 1863, 14 Stat.
647, the right to take fish at all usual and accustomed fishing places
outside the Nez Perce Reservation and the exclusive right to take fish
in all streams running through or bordering the reservation were
reserved for the Tribe in said treaties. The Complaint further states
that the Snake River supported substantial runs of anadromous fish and
that the construction of Brownlee, Oxbow and Hells Canyon Dams in 1958,
1961 and 1967, respectively, created total barriers to the migration of
the anadromous fish, thereby destroying the fish runs and violating the
reserved fishing rights stated in the above-described treaties. In the
Complaint, the Tribe seeks actual, incidental and consequential damages
in amounts to be proven at trial together with $150,000,000 in punitive
damages as well as pre and post-judgment interest and costs and
attorney fees.
On September 11, 1992, the Tribe filed an Amended Complaint in which it
amplified its original Complaint by asserting that Brownlee, Oxbow and
Hells Canyon Dams were "constructed, operated and maintained in such a
manner as to damage plaintiff's rights" to harvest fish, which rights
the Tribe asserts to be "present, possessory property right(s)". As
the basis for its alleged right to recover damages from the Company,
the Tribe asserts that the Company negligently constructed, operated
and maintained Brownlee, Oxbow and Hells Canyon Dams, that the Company
negligently failed to prevent or mitigate harm to the Tribe, that the
Company intentionally and willfully destroyed, interfered with, and
dispossessed the Tribe of its property rights, and that the Company
improperly exercised dominion over the Tribe's property, thus depriving
the Tribe of its possession. The Tribe has requested to try its case
to a jury. As was true for the Tribe's original Complaint, the Tribe
seeks through its Amended Complaint to secure actual, incidental, and
consequential damages in amounts to be proven at trial, together with
pre and post-judgment interest, costs and disbursements of the action,
attorney fees and witness fees. The Amended Complaint restates the
Tribe's claim for punitive damages, but omits the prior reference to a
sum certain in favor of requesting punitive damages in an "amount
sufficient to punish the defendant and deter others".
On September 18, 1992, the Company filed a motion for summary judgment
in the hope of securing dismissal of the Tribe's action. On
January 19, 1993, a federal court hearing was held before a federal
magistrate on the Company's motion for summary judgment. On July 30,
1993, the magistrate issued a Report and Recommendation to the District
Judge wherein it was recommended that the Company's motion for summary
judgment be granted. The Tribe filed briefing in which it urged the
District Court to reject the Magistrate's Report and Recommendation,
and the Company responded with a request that the District Court enter
summary judgment in accordance with the Magistrate's opinion.
On November 30, 1993, the District Court entered a second order of
reference, in which the court sent the case back to the Magistrate for
the Magistrate to make additional findings with respect to the Tribe's
contention that it is entitled to compensation based on physical
exclusion from its usual and accustomed fishing places. The Magistrate
ordered the parties to brief this issue. That briefing was concluded,
and oral argument was held before the Magistrate on February 11, 1994.
On March 21, 1994, the Federal District Judge issued an Order Adopting
the First Report and Recommendation of the Magistrate granting the
Company's motion for summary judgment on all claims except the Tribe's
claim for compensation based on exclusion from its usual and accustomed
fishing places, which part of the motion the District Judge denied
without prejudice. The District Judge will enter a ruling on that
portion of the claim after analysis of the briefing the parties have
submitted in response to the Magistrate's Second Report and
Recommendation.
The lawsuit is still in the early stages, and the Company is unable to
predict the outcome of this case. However, the Company believes its
actions were lawful and intends to vigorously defend this suit.
This matter has been previously reported in Form 10-K dated March 16,
1992, March 12, 1993, March 10, 1994, and other reports filed with the
Commission.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
File
Exhibit Number As Exhibit
*4(a) 2-3413 B-2 - Mortgage and Deed of
Trust, dated as of October 1, 1937,
between the Company and Bankers Trust
Company and R. G. Page, as Trustees.
*4(b) - Supplemental Indentures to
Mortgage and Deed of Trust:
Number Dated
1-MD B-2-a First July 1, 1939
2-5395 7-a-3 Second November 15, 1943
2-7237 7-a-4 Third February 1, 1947
2-7502 7-a-5 Fourth May 1, 1948
2-8398 7-a-6 Fifth November 1, 1949
2-8973 7-a-7 Sixth October 1, 1951
2-12941 2-C-8 Seventh January 1, 1957
2-13688 4-J Eighth July 15, 1957
2-13689 4-K Ninth November 15, 1957
2-14245 4-L Tenth April 1, 1958
2-14366 2-L Eleventh October 15, 1958
2-14935 4-N Twelfth May 15, 1959
2-18976 4-O Thirteenth November 15, 1960
2-18977 4-Q Fourteenth November 1, 1961
2-22988 4-B-16 Fifteenth September 15, 1964
2-24578 4-B-17 Sixteenth April 1, 1966
2-25479 4-B-18 Seventeenth October 1, 1966
2-45260 2(c) Eighteenth September 1, 1972
2-49854 2(c) Nineteenth January 15, 1974
2-51762 2(c)(i) Twentieth August 1, 1974
2-51722 2(c)(ii) Twenty-first October 15, 1974
2-57374 2(c) Twenty-second November 15, 1976
2-62035 2(c) Twenty-third August 15, 1978
33-34222 4(d)(iii) Twenty-fourth September 1, 1979
33-34222 4(d)(iv) Twenty-fifth November 1, 1981
33-34222 4(d)(v) Twenty-sixth May 1, 1982
33-34222 4(d)(vi) Twenty-seventh May 1, 1986
33-00440 4(c)(iv) Twenty-eighth June 30, 1989
33-34222 4(d)(vii) Twenty-ninth January 1, 1990
33-65720 4(d)(iii) Thirthieth January 1, 1991
33-65720 4(d)(iv) Thirty-first August 15, 1991
33-65720 4(d)(v) Thirty-second March 15, 1992
33-65720 4(d)(vi) Thirty-third April 1, 1993
File
Exhibit Number As Exhibit
12 - Ratio of Earnings to Fixed Charges.
12(a) - Supplemental Ratio of Earnings to
Fixed Charges.
12(b) - Ratio of Earnings to Combined Fixed
Charges and Preferred Dividend Requirements.
12(c) - Supplemental Ratio of Earnings to Combined
Fixed Charges and Preferred Dividend
Requirements.
15 - Letter re: unaudited interim financial
information.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
for the three months ended March 31, 1994.
*Previously Filed and Incorporated Herein By Reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDAHO POWER COMPANY
(Registrant)
Date May 9, 1994 By: /s/ J LaMont Keen
J LaMont Keen
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date May 9, 1994 By: /s/ Harold J Hochhalter
Harold J Hochhalter
Controller
(Principal Accounting Officer)